You asked for a brief description of incentives Washington state offers to encourage the use of renewable energy resources.

SUMMARY

Washington, like Connecticut, has a net metering law that requires electric utilities to buy power their customers produce using renewable resources. Washington's law is broader in several respects than Connecticut's. Washington also gives incentives to customers who generate power using certain renewable resources production, with larger incentives for customers who use equipment manufactured in the state. In addition, Washington exempts renewable energy equipment and related installation services from the sales tax and subjects solar equipment manufacturers to a reduced business and occupations tax.

Much of the information in this report is taken from the database on state incentives for renewable energy, which is available on line at http: //www. dsireusa. org/index. cfm?EE=1&RE=1. The statutory references in this report are hyperlinked to the relevant laws.

NET METERING (REV. Code Wash. § 80. 60. 005 ET SEQ. )

Washington, like Connecticut, requires electric utilities to provide their customers with a credit against their bills for the power the customers generate from renewable resources. Washington's net-metering law applies to systems up to 100 kilowatts in capacity that generate electricity using solar, wind, hydro, biogas from animal waste, or combined heat and power technologies (including fuel cells). All customer classes are eligible, and all utilities, including municipal utilities and electric cooperatives, must offer net metering. In contrast, Connecticut's law applies only to power produced by residential customers. It does not apply to municipal utilities (Connecticut has no electric cooperatives), or combined heat and power systems other than fuel cells.

In Washington, net metering is available on a first-come, first-served basis until the cumulative generating capacity of net-metered systems equals 0. 25% of a utility's 1996 peak demand. This limit will increase to 0. 5% on January 1, 2014. At least one-half of the 1996 peak demand available for net-metered systems is reserved for systems generating electricity using renewable resources. Connecticut does not impose any caps on the amount of power utilities must purchase under its net

Net excess generation (NEG) is credited to the customer's next bill at the utility's retail rate. However, on April 30th of each calendar year, any remaining NEG is granted to the utility without compensation to the customer. Utilities may not require net-metered customers to comply with additional safety or performance standards, or to purchase additional liability insurance. They also may not charge customers any additional standby, capacity, interconnection, or other fee or charge without approval from the state Utilities and Transportation Commission.

RENEWABLE ENERGY PRODUCTION INCENTIVES (Rev. Code Wash. §. 82. 16)

Legislation in 2005 established a baseline production incentive of 15 cents per kilowatt-hour (capped at $ 2,000 per year) for individuals, businesses, or local governments that produce electricity from solar power, wind power, or anaerobic digesters used to produce biogas. The amount paid to the producer is adjusted according to how the electricity was generated by multiplying the incentive by the following factors:

• for electricity produced using solar modules manufactured in Washington state: 2. 4  

• for electricity produced using a solar or wind generator equipped with an inverter manufactured in Washington state: 1. 2  

• for electricity produced using an anaerobic digester, by other solar equipment, or using a wind generator equipped with blades manufactured in Washington state: 1. 0

• for all other electricity produced by wind: 0. 8

The factors are cumulative. For example, if a solar system has both solar modules and an inverter manufactured in Washington state, the factor is 3. 6 (2. 4 plus 1. 2). The payment for such a system is thus the 15% base rate per actual kilowatt-hours generated by the system multiplied by 3. 6.

The incentives apply to power generated as of July 1, 2005, and remain in effect through June 30, 2014. The customer, rather than the utility or the state, retains ownership of the renewable energy credits associated with generation.

The state's utilities pay the incentives and earn a tax credit equal to the cost of those payments. The credit may not exceed the greater of $ 25,000 or 0. 25% of a utility's taxable power sales. A utility may not claim any tax credits for incentive payments after June 30, 2016. Further information about these incentives is available on the state Department of Revenue's (DOR) website, http: //dor. wa. gov.

SALES TAX EXEMPTIONS (RCW § 82. 08. 02567 AS AMENDED BY CH. 218, LAWS OF 2006)

The sales tax does not apply to the sale of equipment used to generate electricity from the wind, sun, or landfill gas; solar water heating systems; and fuel cells. The tax exemption also applies to labor and services related to installation of the equipment. Generating systems must have a capacity of at least 200 watts to be eligible for the exemption. Qualifying solar water heating equipment includes solar water heating collectors, solar heat exchangers, differential solar controllers, and replacement parts for this equipment. The solar water heating exemptions runs until July 1, 2009. Further information about these exemptions is available at http: //www. leg. wa. gov/pub/billinfo/2005-06/Pdf/Bill%20Reports/House%20Final/2799-S2. FBR. pdf

BUSINESS AND OCCUPATIONS TAX ON SOLAR MANUFACTURERS (Rev Code Wash. § 82. 04 et seq. )

Washington manufacturers and wholesale marketers of solar-electric (photovoltaic) modules or silicon components of these systems pay a business and occupations (B&O) tax of 0. 2904%, which is 40% lower than the standard B&O tax rate of 0. 484%. Businesses claiming the credit under this program must file annual reports with the DOR, detailing employment, wages, and health and retirement benefits. The DOR must conduct a study from existing sources of data and report the impacts of this incentive to the state legislature by December 1, 2013.

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